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KarenSmith KarenSmith
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7 years ago
Milton Machine Shop produces 50,000 starter kits per year for Dear to You Lawn Mower Company. Milton's starter kits are considered the best in the business.
At 50,000 starter kits per year, the cost per unit is as follows:
   Direct material   $12.00
   Direct labor   10.00
   Variable overhead   7.50
   Fixed overhead      15.00
      Total   $44.50

A competitor, Starters, Inc., is interested in purchasing 10,000 starter kits from Milton. Starters has offered to pay $45.00 per kit. Milton has the capacity and can easily produce the kits for Starters. The manger at Milton's does not believe that there is any benefit to making this special order for Starters at $45.00 a kit since the kit normally sells for $125.00. Fixed costs will not be impacted by the special order.

REQUIRED:
a.)   Prepare a schedule which details whether Milton Machine Shop should accept or reject this special order.
b.)   Are there any qualitative characteristics that should be taken into account?
Textbook 
Survey of Accounting: Making Sense of Business

Survey of Accounting: Making Sense of Business


Edition: 1st
Author:
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suryoyosuryoyo
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7 years ago
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KarenSmith Author
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#2
7 years ago
Many thanks
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#3
7 years ago
Extremely happy to help
Thumbs up me, please!
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